EBA publishes final draft technical standards defining the homogeneity of the underlying exposures in STS securitisation

The European Banking Authority (EBA) published its final draft Regulatory Technical Standards (RTS) setting out the conditions for the assessment of the homogeneity of the underlying exposures in a pool of a Simple, Transparent and Standardised (STS) on-balance-sheet securitisation.
One of the most important simplicity requirements is homogeneity, which enables investors and originators to accurately analyze the underlying risks and facilitates investor due diligence. In order to maintain consistency for on-balance-sheet securitization to the broader STS framework, the EBA has expanded the current work on the RTS on homogeneity for both asset-backed commercial paper (ABCP) and non-ABCP securitization. In light of the unique characteristics of these securitizations, these draft RTS amend Delegated Commission Regulation (EU) 2019/1851 by extending the scope to on-balance-sheet securitizations.
Some changes have been made to the existing rules in the 2019 Commission Delegated Regulation in order to guarantee consistency with the new mandate for on-balance-sheet securitizations and to further clarify certain obligations:
+ Homogeneous exposures must also be prepared in accordance with same underwriting requirements and serviced in accordance with comparable servicing procedures for on-balance-sheet securitizations.
+ They must fit into the same asset category as those listed there and be further evaluated in light of at least one homogeneity element, such as the type of obligor, the priority of the security interests, the jurisdiction, or the type of real estate.
+ Transitional arrangements have been added to ensure the continuation of current securitization transactions for those securitizations that have been notified as STS and whose securities were issued prior to its applicability date.